Day 24 - Metrics You Should Know
Types of metrics and the most important ones you should know...
Hello learners!
Welcome to the 24th lesson of the series 30 Days of PM by Crework! Till now, we talked about why you need product metrics, but we still haven’t talked what exact metrics you should track. So today, we will do that.
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The Three Types of Metrics
If we have to distribute the metrics into categories, we will do it in this way:
The North Star Metric
A north star metric is the key measure of success for the product team in a company. It defines the relationship between the customer problems that the product team is trying to solve and the revenue that the business aims to generate by doing so.
This serves three critical purposes in any company:
It gives your organization clarity and alignment on what the product team needs to be optimizing for and what can be traded off.
It communicates the product organizations’ impact and progress to the rest of the company – resulting in more support and acceleration of strategic product initiatives.
Most importantly, it holds product accountable to an outcome.
To qualify as a “North Star,” a metric must do three things: lead to revenue, reflect customer value, and measure progress.
Instagram’s north star metric could be Monthly Active Users, Spotify’s north star metrics can be total time spent listening.
Primary Metrics/ L1 Metrics
Primary metrics depict the desired outcome of a particular product, team or initiative. This is unlike the NSM, which represents the desired outcome of the company as a whole.
They should either directly contribute to the NSM or act as a check to make sure the product is growing in a healthy direction.
The primary metric can be more valuable than the NSM in the short-term because of its narrower focus, tighter feedback loop and more immediate association with the specific product. Moreover, the primary metric ultimately feeds into the NSM.
Supporting Metrics/ L2 Metrics
Supporting metrics are indicators that the NSM (or primary metric) is moving in the right direction.
They are particularly useful as leading indicators to your NSM i.e. give you an idea of how your NSM will change before your NSM actually changes. For example - a high email open rate will correlate to (and precede) a large number of high quality users joining the platform.
They also tell you where your efforts to move your NSM may be falling short. In the Amazon example, if you're sending 1000 emails a day, but only 10 of those emails are being opened, then the quality of your emails may need some work.
Metrics that you should know
Awareness Metrics:
How many people are interacting with your product?
Example: Number of website visits, social media metrics (number of likes, shares, impressions, reach), time spent on a website, email open rate
Acquisition Metrics:
How many people are interacting with your product?
Example: Number of leads, number of qualified leads, sign ups, downloads, install, chatbot interactions
Activation Metrics:
How many people are realizing the value of your product?
Example: Number of connections made, number of times an action is performed, number of steps completed
Engagement Metrics:
What is the breadth and frequency of user engagement?
Example: Daily, weekly and monthly active users, time spent in a session, session frequency, actions taken in the product
Revenue Metrics:
How many people are paying for your product?
Example: % of paid customers; average revenue per customer; conversion rate of trial to paid customers; number of transactions completed; shopping cart abandonment rates; ad-metrics like click-through-rate and conversion rate (crucial for ads based businesses)
Retention Metrics:
How many users are returning to your product?
Example: % of users coming back to your platform each day, month, year; churn rates; customer lifetime value
Referral Metrics:
How many customers are becoming advocates?
Example: Net Promoter Score, viral coefficient i.e. the average number of people that your users refer you to
Day 24 - Completed ✅
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